Comfortable in Poverty

With the recent release of the U.S. Census Bureau’s annual report on poverty in America, many media outlets and public interest groups have highlighted the .5% increase in Americans lacking health insurance as evidence of the continuing pervasiveness of harsh, unyielding poverty in America, and have called for increased government healthcare programs to offset declines in private health insurance. In contrast, conservative leaders have pointed to the .3% decrease in poverty, which the U.S. Census Bureau labeled statistically insignificant, as supporting evidence for the success of welfare reform and tax cuts. In the race to politicize the census results, it seems that policy makers are selectively ignoring the significant limitations of the census data.

Some critics of federal poverty measurements argue that the Bureau underestimates poverty while overestimating upper income purchasing power. Former U.S. Health Department Assistant Secretary Wade Horn noted at an August 27 Heritage briefing that the U.S. Census Bureau records income without accounting for non-cash governmental benefits. This overlooks the value of a host of federal programs, including the Women Infants Children (WIC), the State Children’s Health Insurance Program (SCHIP), and Medicaid. Ironically, the Bureau records only pretax income, thereby exaggerating the amount of ‘wealth’ owned by the upper classes. The federal income tax rate for 2006 reached 28% for single filers exceeding $74,200, and capped off at 35% for single filers exceeding $336,550 annually.

Conversely, some academics believe that the current federal measurements underestimate poverty. One Pennsylvania politics professor informed her public policy class that food expenditures occupy a smaller portion of Americans’ budgets than they did in the 1960’s. The federal poverty threshold, first developed by Molly Orshansky in 1963, uses food prices as an income threshold determinant, and excludes the larger capital costs of key items such as transportation, shelter, and electronics— all consumables which have a direct impact on children’s education potential and social integration. As the budget expenditures proportionally decline, this professor argues, this food-based measure no longer adequately estimates the cost of hardware such as computers, cell phones, and cars.

So it seems that what the census doesn’t measure may actually be more important than what it records. Director of Policy Studies at the Heritage Foundation Jennifer Marshall argued at the meeting that “what the census numbers don’t tell us is about the actual living conditions of the individuals the government deems to be poor, nor do they indicate how many Americans are truly poor from year to year, and why.” She considers the measure “both overly simplistic and limited,” arguing that more accurate information is needed to make appropriate policy decisions.

Robert Rector, a Senior Fellow at Heritage and a leading force behind welfare reform, similarly argued that federal studies should highlight the consumption—rather than income—of impoverished households. Many poor families do not record ‘gray area’ earnings because the federal wage threshold provides a disincentive to report joint income or informal earnings. Also, purchasing power varies across metropolitan, suburban, and rural communities. Rector’s study, which utilizes data provided by the U.S. Census Bureau, demonstrates that many allegedly impoverished households live in decent-to-comfortable conditions, making poverty somewhat different from John Edwards’ “terrible condition struggling against incredible poverty.”

Rector’s report shows that the “typical,” median poor household owns a car, air-conditioning, a refrigerator, a stove, a washer and dryer, a microwave, two color televisions, cable or satellite television, a vcr or dvd player, and a stereo. The typical poor family’s house is in good repair and the family is able to afford both food and medical care throughout the year.

With living standards such as these, poverty in America may actually be an enviable state compared to living standards in other nations. According to the Census Bureau, 15.2% of immigrants live in poverty, whereas only 11.9% of natives are below the poverty threshold. Rector claims that 1 in 10 of immigrants in poverty is likely an illegal immigrant, but estimates remain vague; the U.S. census declines to ask immigrant responders whether they have documentation.

Perhaps one of the reasons for contradictory opinions on poverty stems from its highly politicized nature. “High poverty numbers are very important to certain political groups in the United States…,” asserted Rector. State funding for welfare programs is determined by poverty levels, and government workers (and politicians) have a vested interest in maintaining a large antipoverty bureaucratic apparatus. In Dr. Horn’s professional experience, this politicization hindered measurement transformation because “the opening assumption that was sort of put on the table in the first meeting, was that whatever we do, the percentage and number of people in poverty cannot change.” This is because Horn found that “there are those who like to see high numbers and those who like to see lower numbers.” Accurately identifying poverty takes a back seat to other pressing political considerations.

Bethany Stotts is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.